The BCRA will force banks to offer inflation-indexed time deposits for up to $10 million

The Central Bank (BCRA) today approved a rule by which obliges banks to actively offer Fixed Term Deposits (PF) with capital adjustable by the Purchasing Value Unit (UVA) plus an annual rate of 1%, through all their marketing channels for individuals, provided that the placement amount does not exceed $10 million, that is, the same ceiling amount that already exists for traditional FPs that pay a minimum of 69.5% annually.

The imposition arises after having detected that, in the midst of the run against bonds in pesos adjustable by CER, most of the banks had discontinued the offer of this investment instrument or applied a limit of just $100,000 per client to accept it.

“Every time a bank receives an inflation-indexed placement, it must match it with a similar investment. This possibility was greatly complicated when the run against CER bonds began, which affected the mechanism and led all entities to be more cautious in this type of fundraising. What shows that it was a general problem is that not even the public banks would accept UVA fixed terms greater than $1 million,” an executive from a leading private bank explained to THE NATION.

“The banks had a positive position in UVA since its creation, but from June 2021 position became negative, that is, they started to have more deposits than loans in UVA. In this way, higher inflation generated a loss, something that they tried to reduce or avoid.”, explained the economist Francisco Gismondi, director of Empiria Consultores.

Pre-cancelable UVA fixed terms were the most demanded in recent months.

This situation is what led them to first discourage and then limit access to this type of placement that, in recent months, had been the most dynamic due to the upward escalation that inflation rehearsed.

The circular, which establishes the obligation of acceptance for banks, confirms that UVA fixed terms (PF) must be agreed to a minimum unchangeable term of 90 days or 90 days but with the option to pre-cancel it from 30 days after the placement, the most demanded lately.

In the latter case, the rate charged by those who opt for pre-cancellation is 65.5% per year, four points lower than the rate paid by the traditional PF.

The rule also establishes that those who want to make a UVA + 1% fixed term for more than 10 million pesos may do so but for a minimum term of 120 days. Yes indeed, For those who dare to extend the placement up to 180 days, there is no placement cap.

Even if they adopt the prepayment option and execute it after the 120th day of the agreement, they will access interest two points higher than the current prepayment rate, that is, 67.5% per year for current values.

This is an incentive that aims to extend the average term of these deposits (which is at the lowest level in the last 20 years). to try to make the banks more active in the placement of credits, especially, of the two lines that will be made official in a few days to increase installed capacity by $400,000 million and to finance the first export of SME companies (another $130,000 million), as anticipated by the Minister of Economy, Sergio Massa.

The stock of UVA time deposits has grown by 145% so far this year, but at a rate of 14% monthly average in the last four months, due to the rise in inflation and despite the limitations described. It is already around $420,000 million after growing by $43,000 only during July, which already represents just over 8% of total bank deposits.

Leave a Comment